"The interactivity in IPTV opens up a new platform for advertisers, which translates into higher revenues per user for the telecom firms," said Aksh Optifibre's managing director, Kailash Choudhari.

State-run Mahanagar Telephone Nigam Ltd and Bharat Sanchar Nigam are the only companies which now offer limited IPTV services, or television or video signals over broadband.

Bharti Airtel is expected to roll-out its services shortly, while Reliance Communications Ltd in November announced a $500 million pact with Microsoft Corp. for IPTV services in India.IOL Netcom and Aksh Optifibre are battling high costs as television broadcasters charge telecom companies much more than cable operators for program feeds.

"We are paying through our nose - paying a big amount to the broadcasters for each territory," said IOL Director A.S.Oberai.

"Our franchisees are finding it difficult to get TV feed at the same rates which they provide to cable operators, with the result it is becoming more expensive for us," said MTNL's Executive Director, J. Gopal.

Broadcasters are looking for minimum subscriber guarantees, officials said. Any shortfall in subscribers has to be made good by the service provider, adding to costs, said Aksh's Choudhari.

Broadcasters "need to be assured of revenues before offering our content," said Ishwar Jha, CEO of Digital Media Convergence Ltd., which distributes content from Zee Entertainment and Zee News to alternate media platforms.

MTNL has now close to 3,000 subscribers in Mumbai and 5,000 on an all-India basis. "We are able to provide 50-60 connections in a day," Gopal said.

IOL and Aksh have tied up with MTNL in Mumbai and Delhi and with BSNL in other areas to provide IPTV services on the state-owned carriers' broadband network.

Another big hurdle to popularising IPTV is the low broadband penetration. TRAI figures show India's broadband subscriber base at 3.24 million at the end of January, with less than 1 million new users added between April 2007 and January 2008.

MTNL and BSNL are providing 2 mega bytes per second speed - which is theoretically good enough for video streaming. But, consumers may need a higher bandwidth of 4-8 Mbps for high definition video required to watch video-on-demand and gaming.

"It needs a good feed and last mile connectivity," said Bharti Airtel's vice-president of network services, Shyam Prabhakar Mardikar. Quality of copper also has to be good since India does not have fibre to home connectivity, he said.

Still, companies battle on in hopes of a boost in revenue as well as higher broadband usage in the country.